How stable are stablecoins?

Lai T. Hoang, Dirk G. Baur

Research output: Contribution to journalArticlepeer-review

26 Citations (Web of Science)


This paper analyzes the stability of stablecoins and proposes a framework to test for absolute and relative stability of stablecoins. Based on high-frequency data, we find strong evidence of excess price variations. While Bitcoin is a likely source of this excess volatility because stablecoin returns, volatility and volumes are highly correlated with corresponding Bitcoin time-series, we also demonstrate through a quasi-natural experiment that stablecoins increase the trading volume of Bitcoin. The findings suggest stablecoins play a key role in cryptocurrency markets.

Original languageEnglish
JournalEuropean Journal of Finance
Publication statusE-pub ahead of print - 8 Jul 2021


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